America's independent, non-partisan advocate for overburdened taxpayers.

Letter


An Open Letter to the Washington House of Representatives: Reject Unjustified Taxes on E-Cigarettes!

February 27, 2014


Dear Representative:

On behalf of National Taxpayers Union’s 362,000 members nationwide and our 10,800 members in the Evergreen State, I urge you to reject House Bill 2795, which is currently before the House Finance Committee.  This bill would wrongly define e-cigarettes as tobacco products and impose a 95 percent ad valorem tax on these new goods – an estimated $40 million tax hike that would harm not only small businesses but also public health by discouraging the use of a tobacco-free alternative to smoking.

Before implementing this 95 percent tax, lawmakers should consider the make-up of an e-cigarette. The main ingredients that produce the water vapor—propylene glycol and glycerin—are considered harmless by the FDA and can be found in everything from toothpaste and fog machines to foods and cosmetics. Such products contain no tobacco, and a recent study by Dr. Joel Nitzkin of the R Street Institute found that e-cigarettes can actually reduce the risk of tobacco-related deaths or illnesses by 98 percent or more. By inaccurately defining e-cigarettes as tobacco products and imposing a tax rate of 95 percent, HB 2795 would discourage the use of an option that can save lives.

Small businesses would also be negatively impacted by the unfair tax burden of HB 2795. The e-cigarette stores opening up throughout Washington (as well as existing establishments stocking them) would be hit hardest, as consumers are likely to avoid the 95 percent tax by purchasing from out-of-state vendors over the Internet. As a result policymakers cannot easily predict the consequences for revenues by effectively punishing sales of a new product that can be purchased through other means. Will the projected $40 million in collections actually materialize? This is an entirely legitimate question, based on past history of other so-called “sin” tax increases. Perhaps instead of raising taxes on e-cigarettes to pay for a bloated budget, lawmakers should slow state spending, which ballooned by more than 19 percent between 2001 and 2011, even after accounting for population growth and inflation, according to the Tax Foundation.

Last month, The Washington Post’s Editorial Board wrote that “…e-cigarettes might be a useful tool to reduce harm rather than a gateway to a life of smoking.” Based on the current research surrounding smoking, this certainly appears to be true. For lawmakers genuinely concerned about public health, the answer is clear: vote “no” on HB 2795. Taxpayers and small businesses throughout Washington are counting on you.

Sincerely,

leesig.png
Lee Schalk
State Government Affairs Manager